The Widening gap between rich and poor teams means only a handful will have a shot at the World Series

More and more, Major League Baseball resembles high-stakes poker. Bringing the most money to the
table doesn't guarantee you a victory in poker tournaments. But you need a load of money to even
get a seat with the big boys, ante up, and have a chance at winning. Baseball commissioner Bud
Selig has said that fans want to begin each spring with hope and expectation.

But as many as 15 of
the 30 Major League clubs—possibly more—have virtually no chance of winning the World Series.
Their dim prospects don't stem from a deficit in runs scored or high earned run averages or any of
the standard statistical barometers
for that matter. Their problem is more basic: they simply lack the cash to field a championship
team.

Of the eight teams that made the playoffs in 2001, six spent between $75 million and
$109 million on payroll. The only playoff contenders spending under $75 million were Houston ($60
million) and Oakland ($33 million). Both were eliminated in first-round division series.

Sixteen other teams spending under $75 million sat out the playoffs.

"From 1995 through 2001, only four teams from the bottom half of payrolls reached the postseason,
and combined, they won a total
of five out of 224 games," says Andrew Zimbalist, Robert A. Woods professor of economics at Smith
College in Northampton, Massachusetts, and the author of Baseball and Billions: A Probing Look
Inside the Business of Our National Pastime, an award-winning study of baseball business from
Civil War times to the present.

"There is a stacking of the deck; the most problematic part of that stacking of the deck is that
there are teams at the top that spend so far above everyone else in payroll. There is clear
evidence today that the problem is not just the Yankees, but it is the growing disparity between
the top and bottom revenue teams.

"Just over a decade ago, in 1989, the revenue difference between the highest and lowest teams was
around $30 million. By 1999, this difference grew more than fivefold, to more than $160 million.
When you get to the top handful of teams, they are not spending five or ten percent more than the
teams below them, they are not just spending 100 percent more, or 200 percent more."

The advantages of the rich teams reach to 300 and 400 percent
and beyond. Last year, the Yankees and the Red Sox led the way with payrolls of more than $109
million each, while Oakland and Minnesota held up the rear at $33 million and $24 million,
respectively.

At the outset of Major League Baseball's 132nd season, how dire are some teams' hopes of winning?
Consider the numbers:

-The Minnesota Twins won the World Series in 1991, the last time a team with a payroll in the
bottom half won a championship. The Twins were 17th in payroll that year, spending just $22.5
million.

-A difference of more than $85 million separated the 2001 payrolls of the highest team, the New
York Yankees, with $109,791,893, and the lowest team, the Minnesota Twins, with $24,300,000. This
awesome disparity is not even the greatest ever. In 2000, the Yankees spent $113,365,867, nearly
$98 million more than the Twins' bottom-
feeding $15,822,000.

-Before last season, the last time a team not in the top five in payroll was in a World Series was
1998, when the San Diego Padres, who ranked 10th with a payroll of $53 million, were swept by the
Yankees.

-The 2001 Arizona Diamondbacks ranked eighth in spending ($81,206,523) and won the World Series.
It was the first time in nine World Series that a winning team ranked that low.

-In the 25 years since 1977, seven teams ranked below the top 10 in spending have won the World
Series. But only one—Minnesota in 1991—has won any of the last 10 Series. (See table of Series
winners since 1977 and where they ranked in payroll, page 109).

In addition, teams that once had winning traditions seem to have little or no chance today. Since
the 1970s, teams like Kansas City, Milwaukee and Detroit have enjoyed successful runs. Now, ranked
in the bottom half of payrolls, these three clubs have not only failed to win a World Series, but
not one has won a pennant, division or wild card in 15 years. (Milwaukee won the pennant in 1982,
Kansas City won the World Series in 1985, and Detroit won its division in 1987.)

Moreover, the problem is one of image, not just numbers. "The perception of the fan is also
relevant," says Zimbalist. "It's not an absolute measure. In absolute measures, the Yankee dynasty
of the last five years is no worse than the Yankee dynasty of 1949—53. The
perception is the greater problem today than it was then because it's more on the table. The money
[George] Steinbrenner is spending is all there for everyone to see.

"Baseball once stood alone on the pedestal of team sports. But today, baseball is seriously
challenged by the NFL and the NBA as well as by a growing list of new professional sports and
entertainment options on television and the Internet. So baseball has to care more about fan
sensitivity to these issues since fans have so many more options now."

If fans perceive unfairness, baseball risks losing its prestige and—in the lexicon of
advertising—market share. "What you're really interested in competitive balance is what turns the
fans on and what turns the fans off," says Zimbalist. "What fans respond to is a sense of hope for
their team, a sense of fairness in the process. And insofar as they respond to outcomes, I think
they are much more inclined to respond to winners of championships, winners of divisions, and so
on than they are to winning percentage. Keep in mind, that inequality isn't necessarily bad. Any
rational league would want to have some inequality toward the larger cities. Because you get more
rating points if the Yankees are in the Series than if the Oakland A's are. You don't want perfect
equality. It tends to be a turn-on to have a king of the hill to go after."

Recent evidence also shows that payroll alone doesn't take you to the promised land. Baltimore,
Anaheim and Los Angeles have been emptying the vault lately and the last of them to win a Series
was Los Angeles in 1988. Even the Yankees were spending a lot of money
10 years ago without results. They finished 67-95 in 1990, leading conservative pundit George Will
to quip, "As the Yankees have recently shown, the absence of baseball acumen in the front office
can be a great leveler, regardless of financial assets."

Among the top-ranking teams in payroll last year, five—Toronto, Los Angeles, Texas, Boston and the
New York Mets—didn't make the postseason. Seattle ranked 11th in payroll, yet tied a Major League
record with 116 wins. So the correlation between high payrolls and a high won-lost percentage is
imperfect. The best that can be said is that payrolls influence the outcomes and create a greater
probability of one outcome over another. Predictions fit the realm of inductive logic and
probability, not deductive logic and certainty. "The correlations between payroll and performance
for the last five years is that payroll explains about 30 to 40 percent in the variations in
performance," Professor Zimbalist says. "That leaves 60 to 70 percent of the variation explained
by other factors. There's no guarantee that you're going to win by spending a lot more money. It's
just more likely that you'll win."

So the phrase "economy is destiny" overstates the case. But
is there any chance for a team in the lower half of the payroll rankings to win the World Series
in 2002? Economist Charles R. Link is unequivocal in his answer. "No; it's purely accidental if it
happens." A professor at the University of Delaware, Link thinks that payrolls are highly
predictive of outcomes. "I feel that I can predict the five or six teams that are going to be in
the World Series next year. And I'll be shocked if one of those five or six is not there." Who are
the contenders? "Well, the Yankees are one of them. Could be Boston because Boston just got bought
by an owner who has the resources and they paid a humongous amount of money for the franchise. I
see Atlanta. I see Arizona. I see Seattle. The Mets are going to be there; they just invested a
lot in beefing up the team. Cleveland will be there. And I think eventually Texas will get back
into it, because they've got the money to start buying. One thing they didn't buy was pitching."
But if predictive power is so assured, should Minnesota, Tampa Bay, Montreal, Kansas City and a
few other low payroll clubs just pack it in? "No," says Roger I. Abrams, the dean of Northeastern
University School of Law and author of The Money Pitch: Baseball Free Agency and Salary
Arbitration. "It just means that someone who is rich has to buy those teams. But if you're not
ready to put money into the team, don't play the game. You don't go out on the field without a
glove. Don't go out and own a club unless you're willing to put in the money it's going to take.
If you're almost rich, I think that's nice, but go play another game."
What makes this money talk more urgent from the money talk of decades before? It all changed in
the 1990s.

At the outset of the '90s, hopes for competitive balance in baseball were high. A new national
television contract with CBS and ESPN for 1990 through 1993—together with growing central
licensing, superstation and Copyright Royalty Tribunal revenues—funneled some $19 million a year
to each team. In 1990, $19 million was nearly 40 percent of average team revenues.

A significant change occurred in 1994, when baseball's new national television contract fell by
more than 60 percent. Compounding the bad news for the small-market teams was that big-market
teams were earning more than $40 million a year in unshared local media revenues. The gap between
rich and poor was widening. Then, too, this was the era of new, big-revenue-generating stadiums,
ushered in by Camden Yards (Baltimore) in 1992. Camden was
followed by Jacobs Field (Cleveland) and The Ballpark in Arlington, Texas, both in 1994, and
Turner Field (Atlanta) in 1997. "With
centrally distributed monies below $10 million per club," Zimbalist says, "teams with a big market
or new stadium found themselves with a rapidly growing revenue advantage. The ratio of richest to
poorest in payroll has thus grown to unprecedented proportions."

Baseball's caste system was set.
But to some this talk of money elicits a shrug. Rich owners and poor owners—so what? That's
nothing new. Teams have always won because of some monetary advantage.

The owners ruled the roost from baseball's beginning. A reserve clause was instituted by owners
in 1879, eight years after the beginning of the National Association, baseball's first major
league. The reserve system chained players to their teams in perpetuity. Salaries were capped at
$2,500 for the vast majority of players in the 1880s. Poor teams sold players to rich teams just
to survive. While player sales were becoming commonplace, the players didn't profit from them: the
productive values of players were not marketed but traded between owners. Albert Spalding, who
pitched for Boston and the Chicago White Stockings of the National League before becoming the
owner of the latter, admitted later that he earned $750,000 from his Chicago club in the late
1880s.

The reserve system held salaries in check, even as attendance boomed. Baseball attendance in 1910
reached an unprecedented 7.25 million, and future Hall of Fame players like Ty Cobb and Christy
Mathewson earned $9,000. The average salary, however, was a paltry $1,200. Competition from a new
circuit in 1915, the Federal League, spiked the average to $2,800. Cobb's salary jumped to
$20,000. During this time, players might earn as much as $3,000 extra if their team won the World
Series (sometimes more).

The wealth of owners at the time didn't show up in team payroll but took a different form. The
Yankees of the 1920s bought the Red Sox's best players when Boston owner Harry Frazee needed
financing for his Broadway show No, No, Nanette. Salary dumping was nothing new. Connie Mack,
whose Philadelphia A's had won three World Series from 1910 to 1913, began selling off his stars
after losing to Boston's "Miracle" Braves in the 1914 Series. He even unloaded his so-called
"$100,000 infield" of Stuffy McInnis, Eddie Collins, Jack Barry and Frank "Home Run" Baker. (After
building the team up again and winning three straight pennants and two World Series with the A's
of 1929—31, Mack again sold stars because the Great Depression caused attendance to fall off
sharply after the 1931 season.)

Both leagues made a profit every year from 1920 to 1930, with the Yankees leading the way with a
reported profit of $3.5 million. Babe Ruth was a symbol of their outsized wealth, though his
salary was
singular. The median salary on the historic 1927 Yankees was $7,000; Ruth earned $70,000 that
year. Ruth's salary hit $80,000 in 1930, higher than President Herbert Hoover's $75,000. When
someone mentioned the discrepancy, Ruth replied, "What the hell does Hoover have to do with it?
Besides, I had a better year than he had."

An owner's right to hold players forever, or trade them at whim, ended nearly 100 years after it
began. In 1969, Curt Flood challenged baseball's reserve clause. The St. Louis Cardinals had a
poor season in 1969 and decided to trade Flood and others for Philadelphia slugger Richie Allen.
Flood was making $90,000 with St. Louis; Philadelphia offered $100,000 and then increased it to
$110,000. "There ain't no way I'm going to pack up and move 12 years of my life away from here,"
Flood insisted to reporters. He sued, challenging baseball's reserve clause. Flood lost the case
before the U.S. Supreme Court in a 5 to 3 decision. Justice Harry Blackmun said the proper way to
revise baseball was in Congress, by legislative action, not by judicial action. But Flood's
challenge emboldened other players and they slowly chipped away at the reserve clause.

By 1973, players had won the right to salary arbitration, thanks to a concession negotiated by
Players Association head Marvin Miller in his first Basic Agreement with the owners. As the World
Series was about to begin in 1974, Jim "Catfish" Hunter, that year's American League Cy Young
award winner with 25 wins, decided to terminate his contract with the Oakland Athletics after the
season. Oakland owner Charlie Finley had failed to make an agreed-upon $50,000 payment (half of
Hunter's salary) into a life insurance fund. Hunter cited Section 7A of the Standard Player
Contract, which stated "…the player may terminate his contract upon written notice to the Club, if
the Club shall default in the payments the player provided for…." Arbitrator Peter Seitz voided
the contract.

While Seitz's decision was only indirectly related to free agency, the bidding war that ensued for
Hunter's services was a harbinger of things to come. Representatives from 15 Major League clubs
descended on Ahoskie, North Carolina, near Hunter's home, and participated in a 13-day bidding
period. Hunter eventually signed a five-year deal with the Yankees for $3.75 million, including a
$1 million signing bonus.

In 1975, pitchers Andy Messersmith and Dave McNally challenged the reserve clause in a new way.
Miller observed that the standard player's
contract bound a player for one year. But what if a player didn't sign a contract while playing
for his team that year—would he then become a free agent? Management claimed that the player would
still be reserved by his team. The dispute went to an arbitrator and again Seitz ruled in the
players' favor, saying that the option year in every contract was just that: one option year that
could not be renewed perpetually. Now players could fulfill their contracts and then sign with the
highest bidder. McNally and Messersmith refused to sign contracts with Baltimore and Los Angeles,
respectively, and became free agents. Miller cautioned players against flooding the free agent
market and thereby hurting their own bargaining position.

The owners tried to arouse fear by arguing that minus a reserve system, baseball would be ruled by
the wealthiest teams. Free agency would have dire consequences for competitive balance, they
warned. Many media members, fans and players believed this. It couldn't have been further from the
truth.

In the first 16 years of free agency, from 1976 through 1991, 13 different teams won the World
Series; only the Yankees (1977—78) won back-to-back championships. Fans could enjoy unpredictable
World Series matchups like Pittsburgh and Baltimore, Philadelphia and Kansas City, St. Louis and
Milwaukee, Philadelphia and Baltimore, San Diego and Detroit, and San Francisco and Oakland.
One wonders if some of those matchups would even be possible now. The perennially inept Washington
Senators won in 1924. The 1950 Phillies and the 1959 White Sox—both pennant winners—had a kind of
small-scale charm. The New York Mets went from ninth place in 1968 to a World Series title in 1969
against the heavily favored Baltimore Orioles. But will we see their unlikely equivalents in years
to come? Not if the trend of the last 10 years is any indication.

Since 1991, when Minnesota edged Atlanta in the 10th inning in one of the most thrilling World
Series ever, the Braves and the Yankees have made up nine of the 18 Series contestants, with
Toronto (twice), Cleveland (twice), Philadelphia, Florida, San Diego, the New York Mets and
Arizona making up the rest. (No World Series was held
in 1994 due to a players' strike.) While nine different teams out of a possible 18 signals a
frightening, dynastic dominance to some, that's more variation than in the 1950s, when only seven
different teams competed in the World Series—mostly the Yankees and the Dodgers—and not far behind
the 1940s, when 11 different teams competed.